Innolux to acquire mobile phone designer Jemitek

Innolux Display Corp (群創光電), a flat panel and personal computer monitor maker, yesterday said that it was acquiring a local mobile phone designer to save costs and boost its market share.

Based on a share-swap agreement, each Innolux share will be exchanged for 3.66 shares of unlisted Jemitek Electronics Corp (建美電子).

The acquisition "will strengthen the company's competitiveness in small and medium-size flat panels as fixed costs will drop given better economies of scale," Innolux said in a statement filed to the Taiwan Stock Exchange yesterday.

The planned acquisition is scheduled to close in March, according to the company's filing. The companies did not detail the amount of the acquisition.

Innolux is competing with top industry players like Sharp Corp and Sanyo Epson Imaging Devices Corp in vying for a share of the small and medium-size panel market.

"I'm not surprised at the acquisition as Innolux has been targeting small and medium flat panels [as new sales drivers]," said Eric Lin (林宜正), a flat-panel industry analyst with Yuanta Core Pacific Securities (元大京華證券).

LCD panel modules measuring less than 10 inches made up about 16 percent of Innolux's total revenue of NT$51.4 billion (US$1.57 billion) last year. The majority of its sales, or more than 80 percent, were still derived from PC monitors.

The acquisition would also contribute to the Hon Hai group's move to vertically integrate its supply chain, Lin said.

The Hon Hai group, which also includes handset assembler Foxconn International Holdings (富士康控股), has been focusing on the handset business over the past years, he added.

Jemitek, established in 2003, has about NT$201 million in capital. The company's major shareholders include the nation's two largest laptop computer makers, Quanta Computer Inc (廣達電腦) and Compal Electronics Inc (仁寶), as well as Taiwan's No. 2 flat panel maker Chi Mei Optoelectronics Corp (奇美電子).

Jemitek designs and sells mobile phone panel modules. The company said it supplies its products mostly to local handset makers, including Arima Communications Corp (華冠).

Innolux is expected to ship 17.8 million small and medium-size flat panel modules for mobile phones, portable DVD players and game consoles this year, more than double from last year, Innolux president Tuan Hsing-chien (段行建) told investors last month.

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